Newsonomics: Nine midsummer lessons from a unique moment in press, and American, history

This hardly seems like a beachy, devil-may-care summer. Among fears of North Korean missiles, new Russian menace, and a highly unpredictable Administration, we are a nervous people. For the news media, it’s been a year of two tales. Never has the press been so pilloried, relentlessly, from on-high. Never, as well, has the value of never-say-die enterprising reporting proven so effective at filling in facts and truths amid campaigns of misdirection and almost-comical prevarication. Let’s step back for a midsummer break, considering 9 lessons we may take away from this unique moment in press, and American, history.

Readers are the future of paying for high-quality journalism.

Exhibit A: The New York Times. This year, the Times crossed into milestone territory. Now more than sixty percent of all the Times’ revenue comes from its readers, almost double the percentage it was in the good old days of bountiful print advertising.

While advertising — or the “ad subsidy” has newsies were wont to call it a decade ago — looked as if it would provide durable support of big, well-paid newsrooms forever, that reality shifted, and vanished, in fewer than 10 years.

Make no mistake: Advertising — and now digital advertising, which contributes 42 percent of all Times ad revenue —
remains a fundamental support of the Times enterprise. But it’s secondary to reader revenue, and in that formulation, the Times has both regained confidence and convinced even Wall Street investors that it has a bright future. Its share price again rocketed after its second-quarter earnings report last week, surpassing $20 a share for the first time since 2007. It’s since fallen back into the $19 range, but it’s clear that investors have made a separation between the Times and other public “newspaper” companies.

Digital-only subscriptions, up 93,000 for the quarter, brought in $83 million — up 46 percent over last year’s second quarter.

Though the Times’ overall revenue still tilts more than 60 percent print, it’s much closer to becoming a “digital” company than the newspaper companies around the country that used to be counted as its peers. That’s what investors now see.

Sinclair Broadcast Group has emerged as a new force in national media. If its acquisition of Tribune Media’s 42 TV stations passes final FCC muster, the company would be able to reach households in 72 percent of America. To be sure, a motley assortment of merger opponents — from media diversity-advocating Free Press to Christopher Ruddy’s Newsmax — have become increasingly noisy, but given the anti-regulation tilt of the new FCC, it’s unclear Sinclair’s buy will be stopped.

John Oliver’s searing takedown of Sinclair has only opened up the question of what the impact of such reach would be in the 81 markets Sinclair would serve, with its 200 stations. There are fewer journalism watchers out there, and their diet is national. Who follows the actual news reporting quality of the country’s 700+ news stations? Still, the acquisition portends greater politicization of local news.

One more question arises: Is Sinclair more of a partner or a competitor to Fox? Currently, the company owns 54 local Fox affiliates and would add 16 if it closes the Tribune Media deal.

Clearly, Sinclair aims to be a national power. In buying Circa, the one-time darling of news aggregation innovation (and a fine application, but one whose apparent limits doomed it, Sinclair grabbed the cool name, though seems to employ little of the cool tech. Now Circa aims to be a new national news play, building both an aggregation (from all those stations) and original reporting business that can receive huge promotion every day, throughout most of the country.

How wounded is Fox, and how ready is Sinclair to contest it, hiring away remaining high-profile talent? Sure, Sinclair CEO Chris Ripley denies an interest in starting up a national cable Fox competitor. That could change, or the combination of a fleet of local stations and Circa may be a better way to compete.

Everything’s got a price tag.

Digital First Media has now sold three significant properties in the last 16 months. In the spring of 2016, the private equity–owned DFM sold the Salt Lake Tribune to the Huntsman family and allowed four civic-minded leaders to snatch back the once-proud Berkshire Eagle and its cousins. In June of this year, Hearst bought the New Haven Register and its associated papers.

While Alden Global Capital, DFM’s owner, used UBS as its exclusive banker in trying to sell the whole company two years ago, failing to do so as final negotiations hit a snag with Apollo Global Management, it’s now put out the word to multiple newspaper brokers: Bring us buyers.

As print advertising continues to decline in double digits, Alden may be running into a profit wall. Its DFM management has squeezed every cost in the book, and continues to charge subscribers more and more for each smaller and smaller print edition. Look at its fast-dwindling subscription numbers, market to market, and you see the product. We’ve gone from theory, which I’ve long expressed, to practice: Doubling the price of news products while halving the products is literally killing the business. So DFM will — at least for some of its 97 titles — take less than the 4-4.5 multiple of EBITDA that it wanted from Apollo to sell. Yes, Alden continues to squeeze 25 percent-plus margins from its beleaguered properties, but knows the window on those profits is closing.

If the sellers are clearly more willing, the question arises anew: Which investors, in the Jeff Bezos/John Henry/Glen Taylor/Alice Rogoff wealth circles or civic buyers in the Berkshire style, may pop up? How much brand equity is left in these flagging newspapers? From San Jose to Orange County to Denver to Saint Paul and upstate New York, who do you know who wants to get their hands dirty?

Texting news could be addictive.

Check out the San Francisco Museum of Modern Art’s oh-so-simple feature: Send a text to 572-51 and you get…art.

Art museums have something in common with news companies: Both have lots more stuff than they can place before the eyes of viewers. SFMOMA has more than 35,000 pieces in its collection, so more than 90 percent are nowhere to be seen. For newspapers, it’s worse. The Washington Post publishes 400 pieces a day, the Times 200, and even their most ardent readers miss most of them. Then there are hundreds of thousands of articles — some newly relevant — in the archives.

So maybe it’s worth playing with text retrieval. Quartz raised that to an art with its first app. Certainly, this could be a fertile area of experimentation.

We may long for the Macedonian news fakers.

We may think of 2016 as the beginning of the Fake News Wars, but in truth, the issue was well-known, and well-discussed, on the web earlier. Only Donald Trump’s election sounded — too late — the alert on it and Facebook’s unintended and awkward complicity in it. We’ve since heard about a crazy quilt of fakers, from more sophisticated Putin-funded operations to those Macedonian teens apparently just trying to make a few more denar.

Now, though, we can be more concerned. For a sense of what we might be in for, check out the recent chilling RadioLab episode: “Simon Adler takes us down a technological rabbit hole of strangely contorted faces and words made out of thin air. And a wonderland full of computer scientists, journalists, and digital detectives forces us to rethink even the things we see with our very own eyes.”

The cure for the journalistic blues remains…better journalism.

It’s been a tough year for The Wall Street Journal. The nation’s two other high-quality national dailies, the Times and the Post, have generated huge circulation bumps, while the Journal hasn’t. Worse, it’s seen defections; the highest-profile of those was long-time Journal editor Rebecca Blumenstein, who moved to the Times as a deputy managing editor in February, leaving the #2 slot at the Journal. Editor-in-chief Gerald Baker, a Murdoch loyalist, has “lost the room,” one peer rival summed it up for me recently, noting that both the Times and Post remain in the process of picking up top disgruntled Journal talent. While the Post and Times have driven the news agenda, the Journal has remained on the sidelines.

On Thursday, Journal reporters Erica Orden, Aruna Viswanatha, and Byron Tau broke the story, followed quickly by the Times and Post, that the Kushner Companies, in which Trump son-in-law Jared remains a principal owner, had received a subpoena from New York federal prosecutors, “regarding its use of an investment-for-immigration program.” The good news for the Journal newsroom — and for its readers like me — is that the Journal has been stepping up its game on the tangle of issues around the troubled Trump presidency. We need the Journal, with its depth of financial reporting expertise, to help do the untangling.

All’s fair in love and content re-use.

In an unexpected turn, the News Media Alliance (the trade group of daily newspaper publishers) is newly confronting the big guys for using their content with no or too little compensation. This week, I broke the story of the six daily companies (Tronc, Advance, McClatchy, BH Media, Cox and the Philadelphia newspapers) demanding that LexisNexis “cease and desist” from using their news content in the booming media monitoring business. Sources told me Thursday that the Associated Press, long a player in the “use of content” wars, may be close to its own agreement with LexisNexis, and that could serve as a wider model for publishers.

LexisNexis’s $3 billion media monitoring business provides politicians, stars, big brands, and who-knows-who-else any mention of themselves or their competitors (or anything else) that can be captured by keywords and AI mined data and then sent via alerts and reports. The publishers’ basic complaint: As the machines divine meaning out of the rampaging flow of news, they’re not being adequately compensated for it. Sure, the tech can scan requisite headlines and stories. “One of the problems with the fair use doctrine is that most of the value of a piece of news is usually evident in the headline or lede — the part that is redistributed as abstracts and often under fair use — so the originator may get no revenue,” one highly experienced practitioner in the field noted to me today.

The LexisNexis demand letter, coupled with the News Media Alliance’s attempt to collectively negotiate with Google and Facebook, makes it look as if the newspaper industry is fed up and won’t take it anymore. Yet these two actions may be just nibbling around the edge of the question. What we don’t hear from the news industry: A new theory of the case. What should fair use look like in the digital age?

Of course, it’s a much bigger question than the news industry’s alone. As Lina Khan’s “Amazon’s Antitrust Paradox” has ricocheted its way through the chattering classes (well-captured by Steve Pearlstein recently in the Post, “Is Amazon getting too big?”), the questions of BIGness and of antitrust bother more people. Khan’s arguments make the point that the public interest is missing from traditional consideration of antitrust. That’s public interest as compared to consumer interest, when goods are unfairly priced high by market domination, or advertiser interest, where their pricing is similarly forced unfairly higher. Only in the EU, which has taken on Google more directly, is public interest a part of the legal and societal conversation. We can make the parallel arguments that “fair use” — applied to both LexisNexis and to Google and Facebook, among other content cannibalizers — needs updating.

The metro news business reforms…slowly.

Some readers decried my coverage of the Tronc/civic boosters fight over the Chicago Sun-Times as two bald men fighting over a comb. But I continue to believe that legacy newsletter brands, however humbled, can be revived, and that the brand provides a powerful base to do that. At the same time, look at the coming additions to the Chicago news scene:

ProPublica Illinois just published its first story,in partnership with the Chicago Tribune. It will begin regular publication in September. One project will be to work with City Bureau on a data project. The Sun-Times and WBEZ will be partners for upcoming projects.

Then, WBEZ itself is stepping up its game. Later this month, Steve Edwards will return to the station as VP and chief content officer. He’s tasked with building up the station’s local news presence; while WBEZ, which launched This American Life and other boundary-breaking shows, has been a leader in cultural programming, it’s lagged big-city peers like WNYC, KPCC, and KQED in creating a real regional newsroom. Chicago Public Media CEO Goli Sheikholeslami also plans to bolster the news staff to 90 within three years. Like other big stations, WBEZ has seen a bump in membership, to 85,000 from 65,000 in 2014. That fund fuels the news investment.

Put it altogether and we see the reshaping of one city’s local news landscape.

What’s OLD is new again.

As Ken Burns’ “The Vietnam War” documentary is set to revive so many memories, both iconic Life and Time covers will remind us of how those magazines act as historical markers in American history. TimeLife itself has meant lots of history, compilations, year-books, a business of print-based memory that often populated living room bookshelves. And, now, TimeLife has embraced that most modern of old-is-new marketing devices to sell more stuff. Just announced: the inaugural TimeLife newsletter:

To celebrate over 50 years of work in books, music, and classic TV we’re starting our own newsletter!

If you’re receiving this e-mail you’re a fan of classic music and TV. And you know that at Time Life, we LOVE the classics. We love classic variety shows, we love oldies and rock and roll, we love great sitcoms, we love classic country, and we love classic comedy.

The newsletter will bring you feature stories and news about your favorite classic performers and TV shows. And, we’re not going to hide it, we’ll also be telling you about new DVDs, CDs, and other collectible items.

Now, that’s a way to use the best “new” lead generation publishers have rediscovered in the paid digital content age. As the New York Times sees newsletters drive double the number of conversions of ordinary traffic and the Washington Post sees exploding traffic from its 70 or so newsletters, everyone’s getting in on the craze. What does your inbox look like?